Secrets to successful investing

Navigating stock market downturns

 

When the stock market gets a bit bumpy

 

It’s normal to start thinking about your investments. You might wonder if you should be doing anything differently. But before you make any decisions, remember the 6 principles of resilient investing.

The 6 principles

Think long-term

Markets fall and rise, sometime more than others. The reasons for these changes have varied over the years. While we shouldn’t rely on past performance to predict the future, the index value has always recovered and risen over time. 

Invest for goals 5 to 10 years away

Investing’s most suited to financial goals at least 5 to 10 years away. It’s a marathon, not a sprint, and market fluctuations are part of the journey. Stay focused on your long-term goals and avoid making impulsive decisions based on short-term market movements. 

Diversify your portfolio

Diversification is your best defence against market downturns. By spreading your investments across different asset classes (such as stocks, bonds, property, and gilts) you spread the risk. That’s because if one investment falls, others may stay stable or even rise.

Know your risk appetite

Match your portfolio to your risk appetite. This is personal to you - some investors can tolerate higher volatility, while others prefer more stability. It’s also linked to timeframe -  the longer you can invest, the more risk you might be willing to take, as you’ve longer to recover any losses.

Prepare for some losses

Ups and downs are normal parts of investing. Having a plan that you can follow helps you stay in control. 

Stay informed but avoid overreacting

Keep an eye on market news and economic indicators, and don’t let short-term headlines dictate your investment decisions. Quick or emotional reactions could hurt your long-term goals. Trust your long-term strategy.

Remember…

Successful investing needs discipline, patience and a focus on your long-term goals. By being resilient during market downturns, you better position your investments for long-term growth.

Please remember that the value of investments and the income from them can fall as well as rise, and you may get back less than you invest. Tax treatment depends on individual circumstances and may be subject to change in the future.

What UK market performance over the past 30 years shows us

The S&P World Index (GBP) shows long-term growth from 1995 to 2025, with several short-term declines caused by major world events.

Download the graph that shows the S&P World Index growth from 1995 to 2025 PDF(608KB) 

  • This chart shows the S&P World Index (GBP) from 1995 to 2025. The index starts at about £125 in 1995 and ends just above £930 in 2025. Over these 30 years, the index generally rises, but there are several periods where it falls due to global events.

    Key events and their impact

    • 1999 to 2003: The index climbs quickly, then drops to around £200. This change is linked to the dot-com bubble, the 9/11 attacks and conflict in the Middle East.
    • 2007 to 2009: The global financial crisis causes the index to fall sharply after reaching about £400.
    • 2015: Growth slows but stays positive. This is due to a slowdown in China, the Greek debt crisis and lower petrol prices.
    • 2020: The Covid-19 pandemic leads to a clear dip after a period of steady growth.
    • 2022: The index moves up and down but keeps rising overall. This period includes the Ukraine war, higher inflation and rising interest rates.
    • 2025: The index peaks near £1,200, then drops below £1,000. This is linked to new US tariffs.

    Summary:

    The S&P World Index (GBP) shows long-term growth from 1995 to 2025, with several short-term declines caused by major world events.

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